Exercise 20-1 The gross earnings of the factory workers for Larkin Company durin
ID: 2480872 • Letter: E
Question
Exercise 20-1
The gross earnings of the factory workers for Larkin Company during the month of January are $76,000. The employer’s payroll taxes for the factory payroll are $8,000. The fringe benefits to be paid by the employer on this payroll are $6,000. Of the total accumulated cost of factory labor, 85% is related to direct labor and 15% is attributable to indirect labor.
(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.
Account Titles and Explanation
Debit
Credit
(a)
(b)
(a) Prepare the entry to record the factory labor costs for the month of January. (b) Prepare the entry to assign factory labor to production.Explanation / Answer
SOLUTION :
No.
Account Titles and Explanation
Debit
Credit
(a)
FACTORY WAGE EXPESNE
90000
FACTORY WAGE PAYABLE
76000
PAYROLL TAX PAYABLE
8000
FRINGE BENEFIT TAX PAYABLE
6000
(b)
WORK IN PROGRESS INVENTORY (90000 X85%)
76500
MAUFACTURING OVERHEAD (90000X15%)
13500
FACTORY WAGE EXPENSE
90000
No.
Account Titles and Explanation
Debit
Credit
(a)
FACTORY WAGE EXPESNE
90000
FACTORY WAGE PAYABLE
76000
PAYROLL TAX PAYABLE
8000
FRINGE BENEFIT TAX PAYABLE
6000
(b)
WORK IN PROGRESS INVENTORY (90000 X85%)
76500
MAUFACTURING OVERHEAD (90000X15%)
13500
FACTORY WAGE EXPENSE
90000
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